An auditor would consider internal control over an entity's payroll procedures to be ineffective if the payroll department supervisor is responsible for
A) Hiring subordinate payroll department employees.
B) Having custody over unclaimed paychecks.
C) Updating employee earnings records.
D) Applying pay rates to time tickets.

Question

Quizplus · Accepted Answer

Having custody over unclaimed paychecks could lead to misappropriation or fraud, as it combines record-keeping and custody functions, which should be segregated to ensure effective internal control.

An Auditor Would Consider Internal Control Over an Entity's Payroll